nep-geo New Economics Papers
on Economic Geography
Issue of 2014‒04‒18
ten papers chosen by
Andreas Koch
Institute for Applied Economic Research

  1. Agents of structural change. The role of firms and entrepreneurs in regional diversification By Frank Neffke; Matté Hartog; Ron Boschma; Martin Henning
  2. Place-Based Policies By David Neumark; Helen Simpson
  3. Gibrat’s Law and the British Industrial Revolution By Klein, Alexander; Leunig, Tim
  4. Globalized markets, globalized information, and female employment: accounting for regional differences in 30 OECD countries By Fischer, Justina A.V.
  5. Information Technology and the Distribution of Inventive Activity By Chris Forman; Avi Goldfarb; Shane Greenstein
  6. Distance, production, trade and growth: A note By Mandal, Biswajit
  7. The role of associations in regional innovation systems By Koschatzky, Knut; Schnabl, Esther; Zenker, Andrea; Stahlecker, Thomas; Kroll, Henning
  8. Trade and Spatial Growth: the Nexus that was not missing By Sirimal Abeyratne; Nawalage S. Cooray
  9. Cross-sectional growth in US cities from 1990 to 2000 By Rafael González-Val
  10. National Institutions and Subnational Development in Africa By Michalopoulos, Stelios; Papaioannou, Elias

  1. By: Frank Neffke; Matté Hartog; Ron Boschma; Martin Henning
    Abstract: Who introduces structural change in regional economies: Entrepreneurs or existing firms? And do local or non-local firms and entrepreneurs create most novelty in a region? Using matched employer-employee data for the whole Swedish workforce, we determine how unrelated and therefore how novel the activities of different establishments are to a region’s industry mix. Up- and downsizing establishments cause large shifts in the local industry structure, but these shifts only occasionally require an expansion of local capabilities because the new activities are often related to existing local activities. Indeed, these incumbents tend to align their production with the local economy, deepening the region’s specialization. In contrast, structural change mostly originates via new establishments, especially those with non-local roots. Moreover, although entrepreneurs start businesses more often in activities unrelated to the existing regional economy, new establishments founded by existing firms survive in such activities more often, inducing longer-lasting changes in the region.
    Keywords: Structural change, entrepreneurship, diversification, relatedness, regions, resource-based view
    Date: 2014–04
  2. By: David Neumark; Helen Simpson
    Abstract: Place-based policies commonly target underperforming areas, such as deteriorating downtown business districts and disadvantaged regions. Principal examples include enterprise zones, European Union Structural Funds, and industrial cluster policies. Place-based policies are rationalized by various hypotheses in urban and labor economics, such as agglomeration economies and spatial mismatch – hypotheses that entail market failures and often predict overlap between poor economic performance and disadvantaged residents. The evidence on enterprise zones is very mixed. We need to know more about what features of enterprise zone policies make them more effective or less effective, who gains and loses from these policies, and how we can reconcile the existing findings. Some evidence points to positive benefits of infrastructure expenditure, and also investment in higher education and university research – likely because of the public-goods nature of these policies. But to better guide policy we need to know more about what policies create self-sustaining longer-run gains.
    JEL: H23 H71 J23 J38 R12
    Date: 2014–04
  3. By: Klein, Alexander (University of Kent); Leunig, Tim (London School of Economics)
    Abstract: This paper examines Gibrat’s law in England and Wales between 1801 and 1911using a unique data set covering the entire settlement size distribution.We find that Gibrat’s law broadly holds even in the face of population doubling every fifty years,an industrial and transportrevolution, and the absence of zoning laws to constrain growth. The result is strongest for the later period, and in counties most affected by the industrial revolution. The exception were villages in areas bypassed by the industrial revolution.We argue that agglomeration externalities balanced urban disamenities such as commuting costs and poor living conditions to ensure steady growth of many places, rather than exceptional growth of few.
    Keywords: Gibrat’s law, city-size distribution, industrial revolution
    Date: 2013
  4. By: Fischer, Justina A.V.
    Abstract: Accounting for within-country spatial differences is a neglected aspect in many cross-country comparisons. This paper highlights this importance in this empirical analysis of the impact of a country’s degree of informational and economic globalization on female employment in 30 OECD countries, using a micro pseudo panel of 110’000 persons derived from five waves of repeated cross-sections from the World Values Survey, 1981 to 2008. I conjecture that informational globalization affects societal values and perceived economic opportunities, while economic globalization impacts actual economic opportunities. A traditional cross-country analysis suggests that the informational dimension of globalization but not the economic one increases the probability of employment for women – contradicting the Becker (1957)-hypothesis of international competition mitigating discrimination in employment. However, accounting for sub-national regional gender heterogeneity reveals that the impact of worldwide information exchange works rather at the regional level, while economic globalization (trade) increases female employment in general.
    Keywords: Globalization; economic integration; labor market; employment; regions; social norms; communication; discrimination; gender; World Values Survey
    JEL: D83 F14 F16 J16 J71 R23 Z1
    Date: 2014–04–06
  5. By: Chris Forman; Avi Goldfarb; Shane Greenstein
    Abstract: We examine the relationship between the diffusion of advanced internet technology and the geographic concentration of invention, as measured by patents. First, we show that patenting became more concentrated from the early 1990s to the early 2000s and, similarly, that counties that were leaders in patenting in the early 1990s produced relatively more patents by the early 2000s. Second, we compare the extent of invention in counties that were leaders in internet adoption to those that were not. We see little difference in the growth rate of patenting between leaders and laggards in internet adoption, on average. However, we find that the rate of patent growth was faster among counties who were not leaders in patenting in the early 1990s but were leaders in internet adoption by 2000, suggesting that the internet helped stem the trend towards more geographic concentration. We show that these results are largely driven by patents filed by distant collaborators rather than non-collaborative patents or patents by non-distant collaborators, suggesting low cost long-distance digital communication as a potential mechanism.
    JEL: O31 O33 R11
    Date: 2014–04
  6. By: Mandal, Biswajit
    Abstract: This short note tries to argue that distance is not necessarily harmful for trade. It is shown that there may be an increase in the production and volume of trade if time zones of the trading nations are non-overlapping. This implies a positive effect of distance on the volume of trade. It is also shown that exploitation of time zone difference raises welfare and ensures capital accumulation. The note builds on the emerging literature on time zones and pure theory of international trade. --
    Keywords: trade,time zone
    JEL: F1
    Date: 2014
  7. By: Koschatzky, Knut; Schnabl, Esther; Zenker, Andrea; Stahlecker, Thomas; Kroll, Henning
    Abstract: This paper addressed the need for research regarding the role of associations in innovation systems. As defined here, the term association embraces not only organisations like business associations, but all actors who associate to pursue joint objectives and positively influence their (regional) innovation system. In the innovation system's perspective, these associations perform intermediary functions. As the relevant activities are often initiated by individuals acting in specific environments and circumstances, we need to consider not only the level of the organisation (i.e. meso level), but also the macro level of the innovation system and the micro level of individuals. Against the background of economic and social theory, intrinsic motivations have therefore also been discussed. External conditions, like the mode of governance and the logic of influence are also relevant as these define the framework conditions. Over time, associations may evolve in line with changes in the environment and internal developments. This evolution can be regarded as a life cycle which is specific to each association. Different types of associations and their specific functions have been mentioned using the example of Germany. While each of the listed associations can be regarded as an individual case, we can also assume that there are certain traits which are shared by all of them. Thus, we proposed four hypotheses addressing the macro level, i.e. the level of the regional innovation system, the meso level, i.e. the level of the association, and the micro level, which considers the motivations of individuals. We further proposed an empirical concept to be applied to study the role of associations in innovation systems. --
    Date: 2014
  8. By: Sirimal Abeyratne (International University of Japan); Nawalage S. Cooray (International University of University)
    Abstract: Trade leads to an acceleration of economic growth as well as to its spatial concentration. While tradegrowth nexus has been the primary focus in trade analyses, until the recent past spatial growth concentration has received little space there. It appears that the simplifying assumptions of trade models and analyses have become the main stumbling blocks that push spatial growth away from trade theory. It is the rapid change in the shape of the world economy led by trade liberalization and global integration that have created this space to place intra-national economics within the premises of international economics. Spatial growth within trade analyses was, however, not bizarre to trade theory. Bertil Ohlin as well as his teacher, Eli Heckscher ? the coauthors of the Heckscher-Ohlin theory of comparative advantage ? did not miss the point that comparative advantage is based on location-specific factors. The analyses of the locations of production and economic geography seem to have missed the early contribution to the subject by Ohlin and Heckscher who were not confined themselves by the simplifying assumptions of their own trade theory. The paper derives from its literature review that the benefits of agglomeration, the costs of connectivity, the degree of factor mobility, and the size of the markets are essential components that form centripetal forces of spatial growth concentration.
    Keywords: Economic geography, International trade, Regional development, Spatial economy
    JEL: F12 F13 F15 F16 R11 R12
    Date: 2014–04
  9. By: Rafael González-Val (Universidad de Zaragoza & IEB)
    Abstract: This paper analyses the growth of American cities, understood as the growth of the population or of the per capita income, from 1990 to 2000. This empirical analysis uses data from all the cities (incorporated places) with more than 25,000 inhabitants in the year 2000 (1152 cities). The results show that while common convergence behaviour is observed in both population and per capita income growth, there are differences in the evolution of the distributions: the population distribution remains almost unchanged, while the per capita income distribution makes a great movement to the right. We use two different methodologies to test cross-sectional convergence across cities: linear growth models (allowing for spatial spillovers between locations) and spatial quantile regressions. We find evidence of significant spatial effects and non-linear behaviour.
    Keywords: City growth, linear model, spatial lag model, spatial error model, spatial quantile regression
    JEL: R00 R11 R12
    Date: 2014
  10. By: Michalopoulos, Stelios (Brown University and NBER); Papaioannou, Elias (London Business School, NBER and CEPR)
    Abstract: We investigate the role of national institutions on subnational African development in a novel framework that accounts both for local geography and cultural-genetic traits. We exploit the fact that the political boundaries in the eve of African independence partitioned more than two hundred ethnic groups across adjacent countries subjecting similar cultures, residing in homogeneous geographic areas, to different formal institutions. Using both a matching-type and a spatial regression discontinuity approach we show that differences in countrywide institutional structures across the national border do not explain within-ethnicity differences in economic performance, as captured by satellite images of light density. The average non-effect of national institutions on ethnic development masks considerable heterogeneity partially driven by the diminishing role of national institutions in areas further from the capital cities.
    Keywords: Africa, Borders, Ethnicities, Development, National Institutions, Regression Discontinuity
    Date: 2013

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